PurposeAs the world began to witness an unprecedented rate of environmental destruction, economists and international institutions have been toiling away for decades, making every effort to dissect the dynamics of the relationship between the environment and the economy. Many claims have preached that there is a trade-off between environmental wellbeing and economic prosperity, where economic growth would be hindered by environmental protection. As we continue to neglect nature, will the world be capable of maintaining infinitely growing economies without falling into a deficit of natural resources? The foundation of all forms of economic growth springs from nature. Therefore, this study aims to explore the true impact of environmental protection policies on economic performance, and claims that well-designated environmental policies would only strengthen economies.Design/methodology/approachThis study aims to investigate the impact of environmental protection policies on gross domestic product (GDP) growth utilizing a selected sample of 18 OECD countries. Fixed effects panel regression was conducted for the sample from 1998 to 2015.FindingsFindings suggest that an increase in the environmental protection stringency is associated with an increase in GDP in the long-run. Whereas in the short run, more stringent environmental policies have been shown to have a questionable impact on GDP, brought to light by the mixed results portrayed in the short-run data.Research limitations/implicationsWhile it is true that this study has utilized data from the The Organisation for Economic Co-operation and Development (OECD), the findings could be applicable to countries of the MENA region. This is due to the fact that GDP levels of OECD countries and Middle East and North African (MENA) countries have been converging over the past few decades. The convergence suggests that both regions seem to be following similar trends since the year 1990, with an increasing similarity in trend over the years.Originality/valueThis paper empirically proves that the protection of nature is necessary for the sustenance of long-term economic growth. This study also provides an approximate time range of when the economic gains of environmental protection would be realized, specifically in the beginning of a green growth transition. This makes the study findings accurately relevant to Arab countries, where providing a time range is necessary to alleviate some the uncertainty of policymakers in the MENA region towards environmental policies.
It is forecasted that 250,000 people will die every year because of climate change and that 86.4 percent of the world population will be living in poverty by 2050. Previous literature has highlighted the tradeoff between poverty reductions and eliminating environmental degradation. Improving the livelihood of the poor therefore has to include improving the environment as well; especially that the poor suffer disproportionally from the effects of environmental decline. This paper tests the long term impact of climate change on economic growth in Egypt over a time period of 98 years using the Threshold model. The estimated threshold regression model suggests 22.9o C as the threshold value of temperature rate above which temperature significantly retards the growth rate of GDP. In addition, below the threshold level, there is a statistically significant positive relationship between Temperature and growth.
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